2002 (1) TMI 157 - AT - Central Excise

Summary

Issues Involved:
1. Classification of imported go-karts under the Customs Tariff.
2. Applicability of the Motor Vehicles Act for classification purposes.
3. Determination of whether go-karts are for transport of persons or for amusement.
4. Relevance of previous Tribunal decisions on similar matters.
5. Liability for confiscation and imposition of penalties.

Issue-wise Detailed Analysis:

1. Classification of Imported Go-Karts:
The primary issue in this appeal is the classification of go-karts imported by Nishiland Park Limited. The importer claimed classification under Heading 95.08 of the Customs Tariff, which covers "roundabout swings, shooting galleries, and other fairground amusements; travelling circuses, travelling menageries, and travelling theatres." However, the department argued that the goods were more appropriately classifiable under Heading 87.03, which pertains to "motor cars and other motor vehicles principally designed for transport of persons, including station wagons and racing cars."

2. Applicability of the Motor Vehicles Act:
The Commissioner rejected the argument that go-karts should not be classified as motor vehicles under Heading 87.03 because they are not suitable for public road use and lack essential features required under the Motor Vehicles Act, such as lights, gearing, and signaling equipment. The Commissioner emphasized that these arguments were irrelevant for classification purposes and confirmed that go-karts met the criteria of Heading 87.03 as they are designed for the transport of persons.

3. Determination of Whether Go-Karts Are for Transport of Persons or for Amusement:
The Tribunal had previously considered a similar case in Leisureland Pvt. Ltd. v. CCE, where it was determined that go-karts were not covered by the Motor Vehicles Act definition but were classified under Heading 87.03 based on their technical specifications and intended use for transporting persons. In this case, the Technical Member noted that the definition in the Motor Vehicles Act was not relevant for classification under the Central Excise Tariff Act. The third member also agreed, emphasizing that the tariff requires only that the goods be principally designed for the transport of persons.

4. Relevance of Previous Tribunal Decisions:
The Tribunal's prior decision in Leisureland Pvt. Ltd. v. CCE was a significant reference point. The majority view in that case was that Heading 87.03 was not limited to vehicles designed for use on public roads. This view was reiterated in the present case, with the Tribunal noting that the go-kart's lack of instrumentation, lights, and horn did not preclude its classification under Heading 87.03. The Tribunal also noted the similarity in specifications between the go-karts in both cases.

5. Liability for Confiscation and Imposition of Penalties:
The appellant argued that the go-karts were significantly different from those considered in Leisureland Pvt. Ltd. v. CCE, emphasizing that the current go-karts lacked lights, horn, and other features. However, the Tribunal found that these differences were not significant enough to alter the classification. The Tribunal also considered the manufacturer's certificate and the appellant's belief that the goods were classifiable under Heading 95.08. Given the evidence and the appellant's bona fide belief, the Tribunal set aside the penalty and reduced the redemption fine from Rs. 4 lakhs to Rs. 50,000.

Conclusion:
The Tribunal concluded that the go-karts were correctly classifiable under Heading 87.03 as motor vehicles designed for the transport of persons. The appeal was allowed in part, with the penalty set aside and the redemption fine reduced.